In Re: West Bengal Iron and Steel Scrap Dealers'' Association

Bose, J.—This is an application for amendment of a petition filed in respect of an application made under Sections 397, 398 and 403 of the Indian Companies Act, 1956. In the original petition under the said sections of the Companies Act, eleven persons were described as Petitioners and the petition was on the footing that they were the members or shareholders of a company-known as West Bengal Iron and Steel Scrap Dealers'' Association having its registered office at 66 Bentinck Street, Calcutta. The said petition was signed by three persons-Ranajit Roy Chowdhury, Amarendra Nath Banerjee and Amulyadhan Dutta- amongst others who were the Petitioners in the said application. But these three Petitioners, Ranajit, Amarendra and Amulya, did not describe themselves as partners of the respective firms to which they belonged and which firms were in fact shareholders in the company West Bengal Iron and Steel Scrap Dealers'' Association. It is alleged that Ranajit Roy Chowdhury is a partner in the firm of Messrs. Roy Chowdhury and Co., the said Amarendra Nath Banerjee is one of the partners in a firm known as Messrs. Scrap Shop, and the said Amulyadhan Dutta is a partner of a firm known as Messrs. Chakravarty and Co., and although these firms are in fact the members of the company and the names of these firms are entered in the register of shareholders as members of the company, these three persons-Ranajit, Amulya and Amarendra-signed the petition in their individual capacity and not on behalf of the firm nor did they describe themselves as partners of the said firms. It is further alleged that in para. 53 of the original petition the words "in writing" after the word "consent" have been omitted by mistake and, accordingly, necessary correction should be made in the said paragraph by adding the words "in ''"writing" after the word "consent". A further amendment is asked for introducing the names of four parties as Petitioners Nos. 12, 13, 14 and 15 and the names of these four parties are Subodh Chandra Das, Ghose Iron and Steel Dealers, Basu Chowdhury and Co. and Sunirmal Chandra Das. The consent of Subodh Chandra Das, Ghose Iron and Steel Dealers and Sunirmal Chandra Das is evidenced by certain annexures to this petition for amendment but it does not appear that Basu Chowdhury and Co. had at any time consented to join this application u/s 397 as a Petitioner or as a Respondent. In the absence of such consent, the question of addition of Basu Chowdhury and Co. as Petitioner No. 14 cannot arise. So the application, so far as it relates to the addition of Basu Chowdhury and Co. as Petitioner No. 14 need not be considered any further.

It is stated in the petition for amendment that the omissions which are referred to in the petition and which are sought to be rectified by this application for amendment was due to bona fide mistake and such mistakes really crept in because of the hurry with which this application had to be made during the Long Vacation.

In the affidavit in opposition which has been filed on behalf of the company it is alleged that two of the Petitioners, namely, Sachindra Narayan Mitra and Angshumala Mukherjee had transferred the shares which they were holding in this company in favour of one Sisir Kumar Roy Chowdhury and Dilip Kumar Ghose respectively and so these Petitioners are no longer members of the Association and cannot therefore figure as Petitioners in this application. This fact of transfer has been disputed in the affidavit in reply affirmed by one Bisseswar Mukherjee on 21st January, 1958, in para. 4(c) of the affidavit and it does not appear from the affidavit in opposition that these alleged transfers have been registered in the books of the company;

Mr. R. Chowdhury, learned Counsel appearing for the company, has raised several points in opposition to this application. The first objection raised by Mr. Chowdhury is that if the proposed amendment is allowed, that will have the effect of circumventing the provisions of Sections 397, 398 and 399 of the Indian Companies Act, 1956, and will amount to validating the petition made under the provisions of the said sections which was not initially a valid petition. The learned Counsel has drawn the attention of the Court to the decision of the Supreme Court. Rajahmundry Electric Supply Corporation Ltd. Vs. A. Nageswara Rao and Others, . In this case before the Supreme Court, an application was made u/s 153(c) of the Indian Companies Act, 1913, which was substantially though not exactly similar to Sections 397-399 of the Act of 1956 and it was held that the validity of an application u/s 153(c) must be judged on the facts as they were at the time of its presentation and the petition which was valid when presented cannot, in the absence of a provision to that effect in the statute, case to be maintainable by reason of events subsequent to its presentation. Accordingly, the fact that some members of the company who had originally given their consent to the filing of the application u/s 153(c) had subsequently withdrawn such consent did not affect the right of the applicant to proceed with the said application made u/s 153(c) of the Companies Act. Mr. Chowdhury relies on this proposition laid down in the Supreme Court case and argues that if the names of the firms are now allowed to be introduced in the petition in place of the names of the three individuals Ranajit, Amulya and Amarendra who had originally figured as Petitioners and who had signed the petition in their individual capacity, this would have the effect of validating a petition under Sections 397-399 although is was not initially valid when it was filed in this Court. But it may be pointed out that if the Petitioners had described themselves as partners of the respective firms to which they belonged and they had purported to sign the application as representing or on behalf of the firm, no exception-could be taken to the validity of the original petition as filed in this Court. It appears to me that the present case can be regarded as a border line case. It is a case of correcting mis-description of parties and also a case of addition of new parties. The judicial decisions on the question of the power of amendment given to a Court under Order 6, Rule 17, read with Order 1, Rule 10 of the CPC make it quite clear that the power of the Court to grant amendments is very wide and provided no real prejudice is caused to the other parties who are sought to be affected by the amendment, the Court has very extensive powers of allowing amendments which are necessary for completely and effectually adjudicating the rights of the parties or the issues involved in a particular case. Section 399 of the Act of 1956 prescribes the rights or qualifications of persons who can make an application under Sections 397 and 398 and provides that joint holders of shares shall be counted only as one member. Section 399 does not affect or take away the jurisdiction of the Court to allow amendments and correct bona fide mistakes, in appropriate cases.

The attention of the Court has been drawn to Mt. Suga Kuer Vs. Firm Brijraj Ramniwas and Others, and L.N. Chettyae Firm v. M.P.R.M. Firm AIR [1935] Ran. 240 where the suit was originally instituted in the name of a firm which was not really a partnership firm but a proprietory concern, and in such case amendment was allowed substituting the name of the proprietor in place of the name of the firm which was the original Plaintiff in that suit, and it was pointed out that the amendment did not really amount to an addition of parties but merely the substitution of the name in order to correct a misdescription.

In a decision of this Court National Industries v. Sasoon Rice Mills Ltd. 1951 89 C.L.J. 313 an amendment was allowed substituting the name of a firm as a Defendant in place of the name of a company under which description the Defendant had been originally described in the plaint filed in that suit, and it was pointed out that an amendment by which a Defendant described as a limited company is sought to be described as a firm by deleting the word "Limited" in the plaint, it is not introducing a new party or altering tire whole suit but making parties proper so as to bring the controversy between the proper parties into clear relief. Such a case was a case of misnomer or misdescription of the Defendant and the Court had ample power to allow such amendment under the provisions of Order 6, Rule 17 and Order 1, Rule 10(2) of the Code of Civil Procedure. In this decision reference is made to the case of Alexander Mountain and Co. v. Rumere Ltd. AIR [1948] 2 482 in which an amendment was allowed by substituting for the description of the Plaintiff "Alexander Mountain and Co." the words ''''Doris Mountain, widow, executrix "of Alexander Mountain, deceased". So it is quite clear that in the interest of justice and for adjudicating the rights of the parties or the issues involved in a case, the Court readily lends its hands to correct bona fide mistakes in the pleadings where the opposite parties are not really prejudiced by the granting of the amendment. If any question of limitation had been involved in this application I would have been reluctant to allow the prayer for amendment asked for. But there is no such question involved in this case and it is quite open to the Petitioners to present a fresh petition before this Court on the same materials and ask for the reliefs which have been asked for in the original petition after rectifying the mistakes which are sought to be corrected in this application for amendment.

Mr. Chowdhury drew my attention to V. Samanna Iyer Vs. Kadathur Village Rajavaikal Channel Silt Clearance Committee, . In that case a suit had been filed by a person who had no right to sue whatever and in such a suit an application was made for bringing on record in the place of the Plaintiff, who had no right to sue, the person who had in fact the right to sue in respect of the cause of action which had been pleaded in that plaint. In such a case the Court refused to make any order for amendment on the ground that this would be really introducing a new party who was not by any stretch of imagination referred to before. But no reasons are set out in the judgment in support of this conclusion. If the present application had related to the question of amendment of a plaint in a suit, different considerations might have arisen in granting or refusing the amendment. The present application, as I have pointed out already, relates to the amendment of a petition filed under Sections 397-399 of the Indian Companies Act and all considerations which are germane to an application for amendment of a plaint in a suit, are not applicable to the application which relate to the amendment of a petition made under the provisions of the Companies Act.

I may, however, point out incidentally that it has been held by this Court that one partner of a firm is competent to bring and maintain a suit in the firm name and it is not even necessary to join the other partners if they refuse to do so (see Bhadeshwar Coal Supply Co. v. Satish Chandra Nandi and Co. (1936) 40 C.W.N. 824.

The next objection which has been raised by Mr. Chaudhury is that although this application purports to be by 11 persons, only 9 persons have signed the petition, and, therefore, this application is not maintainable. Mr. Chaudhury placed reliance in support of this argument on a decision of this Court Nalinakha Sinha v. Ram Taran Pal (1927) 46 C.L.J. 51, 55. In that case it was pointed out that an order for amendment in respect of a plaint, which was made on an application for amendment made by one of the two Plaintiffs in the suit without reference to the other Plaintiff was a defective order, but it was at the same time observed in that case that whether the plaint of two persons can be amended on the application of one of them seems to be a matter of doubt. It appears to. me, however, that this contention of Mr. Chaudhury has no force inasmuch as the present application relates to one for amendment of a petition which forms the ground of the summons which have been taken out in this case by all the 11 Petitioners who are the original Petitioners in the application under Sections 397-399 of the Companies Act. The petition is merely the ground of this summons and the fact that it is signed by only 9 out of the Petitioners does not in my view make the application defective.

Mr. Chaudhury has raised the further objection that as a partnership firm can never be shareholder in a company, the respective firms which are sought to be introduced as Petitioners in place of Rajani, Amarendra and Amulya cannot maintain this application in their capacity as shareholders of the company and as such, the amendment asked for will be useless and, therefore, should not be allowed.

Mr. Chaudhury has placed reliance on Buckley''s Companies Act, 1949 Edn., p. 75 and upon a decision of the Oudh Chief Court AIR 1944 318 (Oudh) which discusses the relevant English cases on the point and holds that a partnership firm not being a distinct legal or juristic entity cannot be a shareholder in a company inasmuch as the relevant provisions of the Companies Act enjoin that it is only a "person" who can be a shareholder of a company. But it may be pointed out that the earlier view in England as expressed in In re Land Credit Company of Ireland L.R. 8 Ch. 831 and as recognised in Wigram v. Buckley [1894] 3 Ch. 483 and other cases, was that a partnership firm can be registered as a member. But the later view seems to support the contention of Mr. Chaudhury. it is however to be observed that the partnership firms with which thus application is concerned are entered in the register of members of the company, West Bengal Iron and Steel Scrap Dealers'' Association and such names are still on the register and share certificates have been issued in favour of these firms as holders of certain shares. This being the state of affairs, it appears to me that so long as the names of these firms are on the register of shareholders it is not open to the company to dispute the fact of registration or the title of these partnership firms as holders of the shares covered by the share certificates. In the case to which I have made reference in an earlier part of this judgment and reported in 8 Chancery Appeals 83.1 at p. 837 (Wickersham''s case) it was observed by James L.J. as follows:

That being so, it appears to me that their names are entered in that which, in my opinion, is very complete and very satisfactory and efficient register of members, and that their names were so entered by the company as a registration of the title of the members as between them and the company. The company after that could not have disputed the right of any person entered therein on the ground of his not being registered as a member and I am of opinion that the member could not dispute the fact that he was entered on that book as a member registered and having the rights and liabilities of a member in the company.

Similarly in the case Tomkins on v. Balkis Consolidated Company [1891] 2 Q.B. 614 it has been laid down by the Court of Appeal in England that a share certificate issued by a company under their corporate seal stating that the person named in it is the owner of a specified number of shares in the company estops the company from afterwards denying his title to the shares.

Therefore, it is not open to Mr. Chaudhury to urge in this application that the partnership firms who are registered as shareholders in the register of members of the company have no right to be in such register or they are not proper shareholders of the company. It is only if and when the share register is rectified and the names of these firms are removed from the register, that it will be open for the company to take such a plea.

Mr. Chaudhury also attacked the title of these firms as shareholders on the ground that Article 9 of the Articles of Association of the company which are now in force expressly prohibits holding of any share by two or more persons jointly and as in the case of a partnership firm, the partners must be treated as joint holders of the shares, the registration of the names of the firms as shareholders in the books of the company is illegal and on this ground, therefore, they cannot be regarded as shareholders of the company. It may be pointed out however that the present article to which reference has been made was introduced for the first time on the 31st of December 1953 but the three partnership firms concerned were registered as shareholders long before the introduction of these Articles of Association. That being the position, the Articles of Association which have been brought into existence in 1953 cannot affect the rights of these partnership firms who had been put on the register long prior to these articles coming into force.

In my view, therefore, this application for amendment should he allowed and the name of the firm Roy Chaudhury and Co. should be substituted in place of the Petitioner No. 1 and the name of the firm Scrap Shop should be substituted in place of Petitioner No. 8 Amarendra Nath Banerji and the name of the firm Messrs. Chakravarty and Co. should be substituted in place of the name of the Petitioner No. 11 Amulyadhon Datta and the name of Subodh Chandra Das and the names Ghosh Iron & Steel Dealers and Sunirmal Chandra Das should be added as Petitioners and numbered as 12, 13 and 14, respectively. The other amendments asked for in respect of paras. 43 and 53 of the original petition under Sections 397-399 and as indicated in red ink in Annexure "A" of the present petition for amendment are also allowed. Leave to reaffirm the petition and leave to file fresh Warrant of Attorney as asked for in prayers (b) and (c) of the petition are granted. The Petitioners will pay the costs of this application to Mr. Chaudhury''s client. Certified for Counsel. The Petitioners will pay a further sum of Rs. 300 in any event towards costs of the original application under Sections 397-399 as a condition precedent to the amendment being allowed. Such sum is to be paid within a fortnight and in default of payment of the said sum of Rs. 300 within the said period, this application will stand dismissed with costs.